ACIT - 17 (1), MUMBAI vs. AGROMACH SPARES CORPORATION, MUMBAI

The revenue has raised the following grounds of appeal: 1 'On the facts and circumstances of the case and in law, whether the Learned. C I.T.(A) was correct in admitting the additional evidences before him during The appellate proceedings, which was not submitted before the AO during the assessment proceedings, without calling for remand report by violating provisions of Rule 46A of The Income lad Rules 1962."

Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee submitted that the Ld. AO was erred in not appreciating the method of accounting followed by the assessee for accounting commission received from two parties, even though, it has filed necessary details, including summary of purchases, where the commission has been credited to purchases account and net purchase has been taken into account in the profit and loss account. The Ld.CIT(A) after considering relevant submission of the assessee and also taken note of various evidences filed during appellate proceedings, came to the conclusion that the Ld. AO has failed to appreciate the method of accounting followed by the assessee for Agromach Spares Corporation accounting commission received from certain parties, even though necessary evidences has been placed before him, vide written submissions, dated 14/07/2015. The Ld.CIT(A), further observed that although, the assessee has followed a peculiar method and reduced commission received from the total purchases, but when facts and evidences clearly shows that commission has been considered in books of accounts, the Ld. AO ought to have not made any additions towards commission income. Therefore, he opined that there is a merit in the contentions of the assessee and accordingly, deleted additions made towards commission income of Rs. 2,61,53,040/-. Aggrieved by the Ld.CIT(A) order, the revenue is in appeal before us.

The Ld. DR submitted that the Ld.CIT(A) has erred in admitting the additional evidences without calling for a remand report by violating provisions of Rule 46A of the I.T.Rules, 1962, while deleting the additions made by the Ld. AO towards commission income of Rs. 2,61,53,040/-.

The Ld. AR for the assessee, on the other hand strongly supporting order of the Ld.CIT(A) submitted that the assessee has not filed any additional evidences before the Ld.CIT(A) and whatever, evidences considered during appellate proceedings are already furnished before the Ld. AO during the original assessment proceedings, as well as during reassessment proceedings. Therefore, there is no merit in grounds raised by the Revenue challenging the findings of the Ld.CIT(A). The Ld. AR, further submitted that be that as it may, but fact remains that there is no escapement of income, in respect of commission received, because

We have heard both the parties, perused the material available on record and gone through orders of the authorities below. Having considered arguments of counsels for the assessee, as well as the revenue, we find no merit in grounds taken by the Revenue challenging violation of Rule 46A of I.T.Rules, 1962, because the assessee, neither furnished additional evidences before the Ld.CIT(A), nor the Ld.CIT(A) has considered any additional evidences, while adjudicating the issue before him. We further noted that the facts with regard to commission income received from two parties and accounting of such commission income in the books of accounts by reducing the same from purchases has been informed to the Ld. AO during the original assessment proceedings, vide letter dated 04/06/2013. Further, during the reassessment proceedings, the assessee has filed necessary details, vide written submissions dated 14/07/2015 and filed summary of purchases, where the commission income has been credited to purchases account. Therefore, we are of the considered view that there is no merit in grounds taken by the revenue challenging violation of Rule 46A of I.T.Rules, 1962. Be that as it may, but fact remains that the commission income received from two parties has been very much accounted in books of accounts, which is evident from the fact that the assesee has credited agency commission into purchase account and net purchase amount has been taken into profit and loss account. The Ld.CIT(A) after considering relevant details has Agromach Spares Corporation rightly deleted additions made by the Ld. AO towards commission income of Rs. 2,61,53,040/-. Therefore, we are of the considered view that there is no error in the findings recorded by the Ld.CIT(A), while deleting additions made towards commission income and hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismissed appeal filed by the revenue.

In the result, appeal filed by the revenue is dismissed.